Bad Debt VAT Not Reflecting Correctly on VAT201

Bad Debt VAT Not Reflecting Correctly on VAT201

(Screenshot 1)




Info
Question:

We want to write off the bad debt in IQ/ERP Go, but we are unable to record the VAT correctly on the VAT201 form for the bad debt.

When reviewing the journal, the Bad Debts and VAT Input – Trade entries are incorrect. (Please refer to Screenshot 1.)

Quote
The Debtors Control amount of R192,000 needs to be written off as bad debt.

Steps to resolve:

Navigate to Ledger --> Batch Journals. 

Credit the Debtors control account with the amount of R192,000.

The Bad Debts account to be debited with the amount for R192,000

Record the Bad Debts journal with the VAT Rate 4, this will allow the system to calculate VAT amount correctly. 

To proceed click on the Process button. 

As per screenshot 5: the Bad Debt account will preview correctly on the your VAT201 report. 

(Screenshot 1.)



Alert

Note:

Before proceeding, ensure that VAT Rate 4 exists and has been correctly configured as shown in the screenshot below under Utilities → Setup → Company Details → Tax Rates.

Also ensure that the Position on the VAT201 is set to Bad Debt; otherwise, it will not appear on the VAT201 form.


(Screenshot 2.)



(Screenshot 5.)


If we look at the accounting equation or T-Accounts:

Account
Debit 
Credit
Bad Debtors
166,956.22

VAT Input Trade 
25,043.48

Debtors Control 

192,000

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